02 Nov Power Trip: It’s in the Cards
In the market for a travel rewards card? Here’s some expert advice.
By Sara J. Welch
I don’t have a travel rewards card, even though I’ve been a travel writer for over 20 years. When I was a full-time travel reporter, I used to go someplace new every six weeks. Then I had my daughter, and now, as a freelance writer with family responsibilities and a full-time, non-travel-related job, I just can’t get away like I used to. So my only credit card is one I’ve had since the ’90s. Its only benefit is that it doesn’t charge an annual fee.
But now that I’ve reported this article, that’s going to change. As I learned from talking to the experts quoted here, even if you travel only once a year, you can make rewards cards work for you. Just be sure to do some research (fire up that “incognito” browser!) and keep the following ideas in mind.
Consider the two card types
A card can offer either cash back or travel rewards (i.e., points). “I classify credit cards in these two categories, and there are pros and cons to each,” says Sally French, a San Francisco–based writer who covers travel and loyalty rewards programs for NerdWallet. Cash-back cards, which pay you a percentage back on all your spending, “are great if you’re busy and don’t want to spend too much time thinking about credit cards. They come in all sorts of flavors, meaning you can find ones that target whatever you spend the most money on.”
Travel rewards cards, which give you points or miles for your spending, have their own subcategories, French says. “General travel rewards cards basically give you a made-up currency you can use to book travel or exchange for other rewards via certain brand partners,” she explains. The other type of rewards card pays you in points or miles specific to a brand—say, Hilton Honors or Southwest Airlines.
Both types of rewards cards “are a lot more work to manage [than cash-back cards], but if you travel often, especially for work, they’re also much more rewarding,” French says, listing free checked bags, seat upgrades, and hotel room upgrades as among the perks offered by various travel rewards cards. “Some cards get you into airport lounges so you can work before your flight in a space that’s quiet, with plenty of working outlets and even dedicated rooms for making conference calls. These sorts of perks make business travel better.”
If you’re organized about your finances and willing to put in some research, it’s not hard to find a rewards card that fits your personal spending, says Beverly Harzog, a credit card expert for U.S. News & World Report and the author of five books on personal finance, credit cards, and related subjects.
Start with your finances
Where do you spend the most money? On groceries? Gas? Dining out? Some cards offer bonus points in certain categories, notes French, such as 3 to 5 percent on gas, groceries, office supplies, or even Internet service. Harzog uses one rewards card primarily to earn miles, and reserves another exclusively for dining out because it offers a higher percentage in that category. (She also has a cash-back card for groceries.)
Find out your credit score(s)
Your score, a three-digit number from 300 to 850—designed to predict how likely you are to repay a debt—is based on the credit reports that are issued by the three nationwide credit bureaus (Equifax, Experian, and TransUnion). Generally, lenders look for stable employment history and timely bill payments, as well as how many types of credit you have and how often you apply for credit. Reports can vary depending on the information gathered by each of the bureaus, notes the Consumer Financial Protection Bureau, an agency set up by the federal government to protect consumers from predatory lenders.
You can request a free copy of your credit report every 12 months from each credit bureau (go to AnnualCreditReport.com to learn more). This could be a good opportunity to check for errors or discrepancies; sometimes, debts owed by family members or even people with names similar to yours can wind up on your report by mistake.
Don’t apply for cards you have no chance of getting, and don’t expect top rewards if you don’t have excellent credit.
You might have seen offers for cash-back cards paying 2 percent on all spending. But that rate is typically offered to those with excellent credit, cautions French. “Excellent” translates roughly to a credit score of at least 800, so if you’re not there yet, you might get only 1 percent. Similarly, the better travel rewards cards expect a credit score of at least 740, Harzog says.
Don’t neglect snail mail
Look at offline as well as online offers, Harzog notes. “Sometimes you can get a better deal from an offer that comes in the mail.”
Apply for all your cards within two weeks
Every time you apply for a card, you get what is known in the trade as a “hard inquiry” on your credit report. That can lower your credit score by up to five points per application—which can add up if you’re applying for several different cards. However, “if you file all your card applications within a 14-day period, it counts as only one hard inquiry,” Harzog says.
Explore some popular options
“Three of the best rewards cards right now are the Chase Sapphire Preferred, Chase Sapphire Reserve, and Capital One Venture X,” says Caroline Lupini, managing editor of credit card and travel reward information at Forbes Advisor. “All three earn flexible travel rewards that can be redeemed directly through their portals or transferred to their airline and hotel partners. “These cards offer lots of flexibility and don’t lock you into one type of mile or point.”
Lupini says that even people who take just one trip annually can benefit from the $95-per-year Sapphire Preferred card, which pays two points per dollar spent on travel and dining. You also get a $50 annual hotel credit on stays booked through the Chase portal and some insurance coverage for trip cancellations and delays. Points can be used to pay for flights and hotel stays with Chase’s partners, which include Hyatt Hotels and United Airlines.
“Some Hyatts can be booked for 3,500 points a night, and I personally just booked a flight from Brussels to Prague during high season for only 6,000 United miles,” Lupini says. These cards often have very good welcome offers, notes Harzog; for example, Capital One Venture Rewards offers a 75,000-mile bonus to new members, and Chase’s cards pay 60,000 bonus points if you spend $4,000 on purchases in your first three months.
A newer card people might want to consider is the Wells Fargo Autograph Card. There’s no annual fee, and members can earn three points per dollar spent on purchases in categories including travel, gas, phone plans, dining, and even streaming services.
Look hard at the annual fee
If what you’ll save with the card isn’t more than what’ll you pay to have it, what’s the point? Again, this will depend on the type of traveler you are. The Chase Sapphire Reserve costs $550 per year, but that gets you an annual $300 travel credit and up to $100 for the TSA PreCheck or Global Entry application fee, not to mention numerous other benefits, including access to Priority Pass, a collection of about 1,200 airport lounges worldwide.
Bottom line: read the fine print
Ultimately, “there’s no one-size-fits-all answer” when it comes to choosing a card, Lupini says. “You have to read the fine print,” Harzog says. “Some of these cards have complex rewards systems, but when you figure out how they work, you can make them work for you. I earn about $4,000 a year from my cards, and I don’t try very hard.” DW
Sara J. Welch was pregnant with her daughter when she wrote her first article for Diversity Woman 16 years ago.